Sanitary District Settles One Lawsuit, Begins Another

At the same time the Ross Valley Sanitary District (RVSD) announced the settlement of a multi-year legal battle with Campus-St. James developers, the agency also filed an unrelated lawsuit against a contractor still completing work in the district.

In a press release yesterday, the sanitary district announced a settlement had been reached with Campus-St. James Larkspur LLC, who originally entered into an option agreement to buy a 10.5 acre-property from the district at 2000 Larkspur Landing Circle for $12 million in 1999. The settlement will return the property to the district in return for the district paying Campus-St. James Larkspur LLC $4.75 million over three years.

“It’s for the value of the investment that they believe they made in the ten years they controlled the property,” said RVSD General Manager Brett Richards.

Last year, the developers officially pulled out of the deal and filed a suit against RVSD for $15 million. The development plans included a 100-room hotel, 126 condos, and a district office across from the Larkspur Landing ferry.

The suit alleged that the soil was contaminated by hazardous polychlorinated byphenyls (known as PCBs) and that it was the district’s legal responsibility to clean up the contamination. But RVSD General Manager Brett Richards said the PCBs were in the paint on the buildings that were destroyed as part of the construction process. The district has alleged in the past that the lawsuit was only filed after the economic and housing downturn.

“As the downturn in the economy continued, progress on the development slowed to a crawl,” read the statement released yesterday.

After legal mediation over the last year, the developers and district reached the agreement that has the district paying $4.75 million in three annual installments of $1,583,334 for the return of the property.

Richards said that cost had to be weighed against the ongoing cost of legal fees and the possibility of the district facing a losing verdict in a trial.

Both Michael Hooper, a Larkspur resident and principal in Campus Properties, and Steve John, President of St. James Properties, said they couldn’t comment on the results of mediation or the settlement.

According to the district, the total cost of legal fees related to the lawsuit with Campus-St. James was $1,892,359.

The district has come under fire in the past for its large legal bills.

In a, the district’s legal budget (excluding the Larkspur Landing litigation) was recorded as $204,000. By comparison, Faulker wrote, the Central Marin Sanitation Agency and the San Rafael Sanitation District spend on average $15,370 and $10,543, respectively.

According to the district’s own accounting, it spent $1.89 million on the lawsuit with Campus-St. James and $392,236 on other legal expenses.

On Friday, the district also filed a separate lawsuit against JMB Construction, who was contracted to complete pipe replacement work on the hill above Woodlands Market and leading up the Corte Madera Creek, near College of Marin.

The lawsuit seeks $650,000 in damages, which the district says it cost to respond to the t. The suit blames JMB Construction for . The lawsuit also argues that JMB is responsible for “placing, failing to remove, allowing, or allowing others to place” a large amount of construction debris in the pipes, which the district says could have also caused the 2.6 million gallon December sewage spills.

The district originally called the large amount of debris found in the pipes (including nail guns, engineered backfill, construction hats, pieces of track and concrete) “ and has said it could be the work of those with an agenda against the district or the product a contractor dumping the debris. However, because JMB was the contractor on the work, the lawsuit holds them responsible for the damage.

The district completed a 365-page report for the Regional Water Quality Board earlier this month, with pictures that they say document the pipe in good condition before JMB began work near it and nearly entirely crushed after.

The conclusions of the report can be read in detail .

Gina Kathuria, of the Regional Water Quality Board, said the board is still in the middle of its investigation and won’t reach a conclusion about the culpability of the district for 30-90 days.

“We’re in continuing discussion with the district,” said Kathuria.

In addition, the district has not made any progress or installment payments to JMB since the December spill, even as JMB completes the term of its contract and continues to do pipe replacement work in the area.

“Our lawyers recommended that this was the best opportunity,” said Richards as to why the district didn’t wait to file the suit until the work was complete or the regional board had reached its conclusions.

Bill Tarantino, a lawyer representing JMB Construction, said JMB hadn’t been served with a suit and would continue to do their work as contracted “unless the district tells us otherwise.”

Tarantino also said the contractor is standing by its earlier statement from Dana Wilkins: “District management has failed to consider the most obvious cause of the overflow: its own decision to disable the Kentfield pumping station, without an adequate bypass, during one of the heavier predicted rains of the year.”

In addition, Wilkins said in an earlier statement that “the district's decision not to pay JMB for its work on this project is unjustified and in breach of the parties’ contract.”

Richards said, however, that the board has simply not made progress payments, which he said was different than denying payment. “We haven’t said no,” he said.

The Regional Water Quality Board will reach its decision about the December spills in 30 to 90 days and has a number of options, said Kathuria, including issuing a fine or a cease and desist order.

The district will also consider what to do with the Larkspur Landing property, now that the legal wrangling has been resolved. A proposal will be brought to the district board in the fall to consider options for the property, which will likely include moving the administration offices of the district back to Larkspur Landing. The district bought its current San Rafael building for $2.1 million after negotiations for space on the Central Marin Sanitation Agency’s property fell through. In addition, the district will likely consider selling the other portion of the Larkspur Landing property to a different developer.

“I can assure our ratepayers that we will look at all options carefully,” said RVSD Board President Marcia Johnson in the released statement.

“We took over the reins several years ago and I think we’ve done a good balancing job of protecting the interests of our ratepayers and putting an end to more litigation and costs,” said Johnson in the statement.